Introduction

• Author: Susan Kalinka
• Position: Harriet S. Daggett-Frances Leggio Landry Professor of Law at Louisiana State University
• Pages: 695-697

Page 695

Harriet S. Daggett-Frances Leggio Landry Professor of Law at Louisiana State University, Paul M. Hebert Law Center.

The articles in this symposium address issues that have been of interest to members of the Louisiana Legislature in their efforts to reform Louisiana's tax law. In 1999, the Legislature authorized the formation of a Tax Study Committee under the aegis of the Louisiana Law Institute.¹ The Tax Study Committee considered several proposals, including a proposed amendment to the Louisiana Constitution that would have reduced the state sales tax on food and utilities and would have increased the state income tax by eliminating the deduction for federal income taxes paid by individuals.

During its 2000 Regular Session, the Louisiana Legislature enacted a bill (the "Stelly plan") giving Louisiana voters an opportunity to implement the Tax Study Committee's proposed constitutional amendment.² While the Stelly plan was defeated by voters in the November 2000 election, the Louisiana Legislature ensured that tax reform efforts would continue by authorizing the formation of a Select Committee on Tax Structures comprised of members of both the state House of Representatives and the Senate.³

The Select Committee has considered, among other proposals, adopting a combined unitary reporting system, which would ensure accurate apportionment of income between affiliated groups of corporations transacting business in Louisiana and other states. In states that require combined unitary reporting, each member of an affiliated group of corporations reports its share of the group's unitary business income, determined under a formula, to the state in which the income is deemed to be earned. The amount of the group's income that is allocated to a state is determined by multiplying the aggregate taxable income of the group by the group's apportionment percentage. The formulary apportionment percentage generally is determined by comparing the property, payroll, and sales of the group within the state with its property, payroll, and sales in all states. The percentage used and the factors comprising the percentage may vary from state to state.

Louisiana currently requires corporations to use formulary apportionment in determining the amount of their Louisiana income. However, corporations transacting business in Louisiana report their income on a separate reporting basis. Each member of an affiliated group of corporations is treated as a...